FBD sees hard Brexit as main growth headwind this year
Insurance group FBD views the prospect of Britain crashing out of the EU without a trade deal in place as the single biggest headwind facing its performance this year.
However, the insurer's chief executive Fiona Muldoon said the company is staying positive on Brexit and is not counting on a crash-out scenario becoming reality.
Ms Muldoon said she expected a rational economic solution to be reached on Brexit, but called it "an uncertainty we could do without". She said farmers will still need insurance whatever the Brexit outcome.
The bigger concern of a no-deal outcome, she said, would be its impact on Ireland's agriculture industry as a whole.
Approximately 55% of FBD's customer base is still accounted for by farmers and the 30% of the SME insurance market it controls is also heavily agriculture-focused.
While the impact of any Brexit is unwelcome to FBD and to our customers, we are resilient and we will navigate this together with Irish farming and with all other Irish businesses.
FBD's share price - down around 24% in the past 12 months - rose by around 1.6% as a 41% jump in underwriting profit and a better-than-expected net profit lifted a mixed set of annual financial results. On the back of the results FBD has proposed a more than doubling of its annual dividend to shareholders to 50c per share.
The group's revenues - or gross written premium - slipped marginally to €371.5m, while pre-tax profits were flat at €50m. However, net profit - while largely unchanged at €42.4m - came in well ahead of analyst estimates of just €20m.
FBD took a €6.6m hit from more than 1,200 claims from last year's Storm Emma harsh weather and incurred a €12m loss from buying itself out of a debt arrangement with Canadian investor Fairfax.
However, new business grew by 11% and its car insurance partnership with An Post got off the ground. Ms Muldoon said while the insurance market is becoming more competitive she doesn't see scope for much consolidation, but does see opportunities for more business partnerships for FBD.
She reiterated her stance that insurance costs won't come down until the costs of personal injury claims fall and said FBD is "very disappointed" with the slow progress of legislation on the matter.
Fianna Fáil's Billy Kelleher warned that businesses face closure due to not being able to afford "significantly increased insurance premiums" and said the Government has failed to act on the recommendations of the Cost of Insurance Working Group established to examine premium levels.
